Viewpoint group encompasses four separate business areas; a family office, a philanthropic foundation, a research center, and an investment management firm. Philanthropy and giving back to the community is a large and central part of who we are. We clearly see the value and importance of being able to contribute and make a difference to society, yet accusations against philanthropic institutions of political lobbying, and lacking accountability have been coming out of the US. This post aims to explore these issues, and how they may be resolved moving forward.
At the turn of the 20th century, modern philanthropy was established by families such as the Carnegie, Rockefeller, and Russell families, giving large monetary gifts to improve the social and living conditions in the US. Since then, the way donations have been made have largely changed from straight forward gifts and grants to those in need, to courting and supporting political parties, and influencing public policy in favour of the foundation’s views. This shift is the result of the one percent’s increasing wealth, and the government’s declining ability to provide public goods and services, especially since budgets were slashed after the 2008/2009 financial crisis.
The problem with allowing public services to be run and funded by philanthropic organizations is that it has significantly shifted power from the government (which is elected by, and thus accountable to, the people), to the private sector, (which is neither). This can be seen to have negative implications for the state of the democratic process in the US.
An example of this occurring on the conservative side is the businessman and philanthropist Art Pope of North Carolina, who has used his monetary influence to support the “bathroom bill” and stricter voter ID laws. While on the left is Tim Gill who is a software developer and mega-donor in support of LGBTQ causes, including the fight for marriage equality, and adoption rights.
Foundations are often > Governments in crises
Foundations often step in to aid and solve social issues that should be the realm of the government.
A well-publicized example of a private foundation stepping in to solve a problem with a basic public need was during the water contamination crisis in Flint Michigan. Another example is when Detroit was saved from bankruptcy by private foundations after the collapse of the auto industry.
When governments are unable, or unwilling to put resources towards public goods and services, philanthropic organizations increasingly have room to slide further into the driver’s seat of public life. This is undoubtedly beneficial for obvious reasons; the people of Flint deserve to have clean water, and diversification would be a second chance for Detroit.
This type of influence is occurring in different cities, industries, and across the arts, education, health, and urban development. This includes the private funding of charter schools, which has created an entirely parallel school system across the US, and the many urban parks that are being built through financing from billionaires.
This advent of philanthropic power is not solely based on financials, but on agility as well. The lack of accountability to voters and shareholders allows for the freedom to make decisions quickly. When this works, it works very well; problems are solved quickly, and people get the resources that they need. However, when things go wrong, the lack of accountability can lead to certain populations being left behind and others being left worse off than they were before.
Earlier this year Amazon’s CEO Jeff Bezos (whose acts of charity have hitherto been lackluster when compared to other business leaders), tweeted a request on June 15th for ideas that would help “people in the here and now – short term – at the intersection of urgent need and lasting impact.” This move was viewed favourably, as it issued a call to the public asking what was needed, rather than prescriptively providing support without input from those receiving the aid.
“In the absence of national political will to contain economic inequality, a request for public input on big philanthropic decisions could restore some democratic control over public life. If Bezos can help catalyze this movement, it may be good news for philanthropy and democracy alike.” (Lechterman, 2017)
Finding a balance
Creating a balance between the two sides involves updating the oversight rules that govern charitable giving, and increasing the transparency in the reporting of who is involved in giving donations, especially when the recipient is in a position to influence public policy.
Having more strict limits on tax-deductible giving, such as restricting the size of the tax-deductible gift to policy groups, and encouraging gifts from smaller donors allows a larger base of voices to be heard. Additionally, narrowing which nonprofits qualify for tax deductions would also discourage gifts given solely for the purpose of amplifying the givers political and social views and beliefs.
Despite these concerns, the typical view of philanthropic work in society is overwhelmingly positive. With governments often being unable to fulfill the needs of the public, there is a very real space for private aid, and this conversation is an important one to have. The literature surrounding this topic is overwhelmingly American. Our close ties to our southern neighbor mean that they often influence us, making this a relevant discussion for Canadian foundations and governments to have.
Other sources used in post:
Appelbaum, Y. (2017). Is Big Philanthropy Compatible With Democracy?. The Atlantic. Retrieved 28 June 2017, from https://www.theatlantic.com/business/archive/2017/06/is-philanthrophy-compatible-democracy/531930/
Callahan, D. (2017). Opinion | As Government Retrenches, Philanthropy Booms. Nytimes.com. Retrieved 20 June 2017, from https://www.nytimes.com/2017/06/20/opinion/jeff-bezos-bill-gates-philanthropy.html?smid=tw-nytimes&smtyp=cur
Gyarkye, L. (2017). Have the Rich Become “Super Citizens”?. New Republic. Retrieved 15 June 2017, from https://newrepublic.com/article/142667/rich-become-super-citizens
Lechterman, T. (2017). Jeff Bezos is off to a good start if his goal is to reinvent philanthropy. Quartz. Retrieved 28 June 2017, from https://qz.com/1016290/billionaire-philanthropy-helps-a-lot-of-people-but-may-threaten-democracy/
Morey, M. (2014). Philanthropists and the White House: Who's the Boss?. The Atlantic. Retrieved 18 July 2017, from https://www.theatlantic.com/business/archive/2014/05/philanthropists-and-the-white-house/370805/